Is it enough for Sterling to be cheap? The GBP has fared surprisingly well so far this year despite the failure to define the terms of the Brexit break-up between the UK and the EU. Given its prior steep fall, the GBP still seems cheap, but it also faces headwinds even if a hard Brexit can be avoided. Our view regarding Brexit.
The macro perspective
The global economy looks solid: Assessing the American economy was recently hindered by the delayed publication of key economic data. In the Eurozone, various special factors are also making a clear appraisal problematic. But all the available information indicates that an optimistic view of the global economy is still justified. The problems in China, however, persist. Our thoughts about financial markets.
FX market talk
The dollar starts 2019 overvalued: The US dollar started 2019 overvalued against a broad range of G7 currencies as well as versus some major emerging market currencies. The dollar’s strength is not only a reflection of strong US growth, but also of developments outside the US. History shows that phases of noteworthy over- and undervaluation eventually do correct. Our assessment of the dollar.
Download: FX Monthly February 2019